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tv   Bloomberg Daybreak Asia  Bloomberg  May 12, 2022 7:00pm-9:00pm EDT

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>> good morning. we are counting down to asia's major market open. >> welcome to "daybreak: asia." traders hoping for a calmer and to a volatile week -- end to a volatile week. janet yellen says troubles underscore risks and yield regulation is needed. beijing denies a lockdown is coming as residents rush grocery stores and concerns covid curves will intensify. >> it looks calmer even though we are seeing asian equities pointed weaker into this final friday session of what has been a while -- wild week. we are looking at future is looking pretty flat on the week.
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we are seeing bond yields taking lower. the three year yield falling to the west since the start of may. we are seeing a pullback in inflation expectations. we had data yesterday saying place and expectations fell. some of the calm being restored to the crypto space. it could be a quieter start to trading. we are seeing futures in japan and hong kong slipping lower. dollar yen is in focus. the greenback on its longest winning streak when it comes to weekly gains since 2018. we are seeing more resilience when it comes to trading in dollar yen. manufacturing pmi out of new zealand showed a slow down. we are seeing that recession off by half a percent. the aussie dollar after a few attempts to pull back the losses of the last few sessions, still
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sitting under $.69. we continue to see concerns about the global slowdown as well as the uncertainties when it comes to monetary policy and what is going on in china weighing on these risk currencies. shery: you're seeing that flight to safe havens. you mentioned the dollar index, it touched a 20 year high earlier this week. the bloomberg dollar index gaining 7% year to date. we continue to see that fragile sentiment across markets. u.s. futures under pressure despite the fact that we did manage to gain ground in the new york session, or we finished lower but we saw a huge rebound in the last hour of trading in new york after we heard from mary daly saying they are not necessarily primarily considering a 75 basis point hike. that rippled through the markets. the 10-year yield falling towards that 2.8 percent, perhaps that is why we are seeing pressure on sovereign yields across asia.
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we see a rebound in w ti prices, extending gains we saw in new york. tight supplies in the market when it comes to fuel inventory. it was about the crypto assets. we continue to cac of green at the moment -- to see a sea of green at the moment. crypto sitting below its level. a bit of that panic subsiding. we have seen the collapse of the dollar in tara and heather also seeing a -- tether seeing a mini crash. we are below that $2000 level for ether. haidi: let's get some more when it comes to those big moves across digital assets and other markets as well.
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we are likely to see more volatility when it comes to stablecoin, slack, and tether despite some semblance of calm being restored for now. >> it is likely. there is a lot of uncertainty about what is happening now. tether seems to have gotten things together. nothing like terra usd where they had to restart the blockchain and everything. but it does make people think about the stablecoins, there are different types of stablecoins. tether is backed by collateral. the terra one is an algorithmic thing where it tries to mimic a dollar. the rignet -- the algorithmic
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stablecoins in particular are probably going to get more scrutiny. shery: how much does the broader market selloff have to do with retailers that got burned because of the meme stock trading? joanna: you are right that there is some of that. a lot of it has been getting into crypto assets more and might need to sell some riskier assets, might be getting out of risk assets. bitcoin is correlated now with the nasdaq, the s&p 500. you are hearing things about retail investors who went from a $200,000 account to $10,000 were people who did lose a lot of money here, that might have been money that they did not have before. it might not put them back too much but there are people who
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lost a significant amount to might be hurting. haidi: when it comes to moves in the mainstream markets, there is this concern that what we saw across crypto and terra is a reflection of the fear when it comes to liquidity conditions. garfield: very much so. bitcoin and other cryptos, extreme gains over the last couple years, where very much part of the post-pandemic bubble that was blown by the extreme levels of fiscal and monetary stimulus deployed to fight the pandemic. now you are taking that off the table, there has to be concerned that a lot of assets that looked overvalued on traditional metrics and the advantage of crypto is there are no traditional metrics, you just say it is going to go to the sky , but see what used to be this
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bulletproof complex of apparently frothy valuations being brought lower and lower, then dropping a lot, then not seen the big rebounds that we saw often, it leaches the optimism, the animal spirit, being withdrawn from broader markets, partly because people are looking at what is happening to crypto, what is happening to the other darlings, we had robinhood sorting overnight -- sorting overnight. it has been dragged down because the day trader frenzy that was part of the pandemic era meme stock situation, that has also been borne out. that is all part of the picture and it all helps to make it harder for rallies to sustain,
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less likely for people to buy the dips. shery: where is the dollar headed? it is rippling through the broader markets right now. garfield: that also speaks to this overall climate of concern. the dollar seems poised to go up, almost no matter what. the last couple of days, it has rallied strongly against everything but the yen, the yen also acting as a haven. that has been very much about haven concerns. then there's the potential that if sentiment turns around, yields will rise. part of the reason the dollar is falling against the yen recently is yields have come off. if yields rise, you might get the sentiment that there is a rebound in currencies like the aussie and others against the u.s. dollar. then you have the concern that the dollar is going to go back
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to jumping strongly against the yen because yields are going to go up and put pressure on that complex and put pressure on the bank of japan to spend more money to hold down yields. the dollar, the worst-case scenario might be that it stabilizes at these levels. shery: garfield reynolds and joanna there with the latest on the broader markets. the russian trader 5% from 4.5%,
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that would be the highest in 13 years. this as we have general inflation at around 8%, the highest level since the late 1990's for peru. the central bank saying the annual inflation will start to slow down from july, but right now, inflation expectations are risen to around 4.52% from 4.4%. this rate hike follows several across latin america. we are talking about mexico earlier hiking the rate to 7%, from 50 basis points, they are suffering from higher prices. argentina, raising the rate of 49% -- 4.9%. all of these countries starting to tighten aggressively as we continue to see those price pressures. let's not get to vonnie quinn. vonnie: argentina central bank said to have raised interest rates to keep up with that inflationary spike as a street protests. they increase the benchmark rates by 200 basis points to 49%. the decision has not been officially announced. consumer prices rose 6% in april two the highest annual level since 1992. bloomberg has let elon musk musty scrap the margin loan linked to his tesla shares he was going to use to help by twitter.
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instead, he is poised to raise enough equity for the proposed by r. shares of tesla have fallen 25% since he announced he was to buy the social media ban for. pacing has denied the city will locked down, urging people not to hoard food and speculation restrictions will be tightened. the government says it will conduct rounds of mass testing. beijing reported 36 new covid cases thursday, taking the total infections since april to nearly 1000. a veteran lawmaker is returning to the wall of sri lanka prime minister for a sixth time. he was named from your days after the president's brother reigned in the base of violent protests and resigned. it is seen as an attempt to restore credibility as the government negotiates a bailout package. germany is accusing russia of using energy exports as gas
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prices jump on concerns of supply. moscow said some natural gas over the war in ukraine. germany's economy minister downplayed the cuts sandy amounted to 3% of the country's gas imports. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. haidi: still ahead, may is aapi heritage month. we will be speaking with aapi equity alliance about fighting back against hate crimes. coming up, u.s. stocks nearly escaped falling into a bear market as volatility continues to grip. this is bloomberg. ♪
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>> we are seeing the beginnings of a scare. >> we have a fragile recovery. >> 15% increase in airfare after 10%, after 5%, after 2%. >> nursing the shift in goods and services. >> this is outrageous. >> another 50 basis points in july. >> we are going to have to see higher inflation before the fed reacts. >> we are fighting and inflation
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battle on two fronts. on the other hand, we have limitations of supply. >> you have a growth scare happening. >> a stronger slowdown in growth. shery: our guests on concerns gripping the market. let's bring in our next guest who says sources of volatility are unlikely to get resolved soon. which is is pooja malik. -- with us is pooja malik. what is your guiding criteria but now when you want to choose the stocks that you want as a stock picker? pooja: it is an uncertain time in markets from a fundamental standpoint, policy standpoint. when we are looking for stocks now, we are cautiously optimistic because we want to protect downside and we are
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looking for stocks that are not exposed to global risk like global recession. we are looking for stocks in emerging markets that don't have a lot of vulnerability to a slowdown in china. that is a big factor. we are looking for stocks that have compelling valuations, positive fundamentals, and improving investor sentiment. shery: any sectors you can tell us about? pooja: sectors that are domestically oriented sectors. we are looking at telecom closely. you can find a lot of telecom stocks that have good dividends, yields, rising r.o.e.'s. telecom has been interesting for us. we are also looking at industrials. we are looking at companies with higher dividend yields. when stock we looked at in malaysia, the dividend is over
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5%. very strong cash flows. those are some pockets with the downside is limited but there is still upside. haidi: there's not a lot of love for emerging markets at the moment. do you see opportunities within the asian ems even if more broadly we are seeing this avoidance by investors? pooja: we are. on yesterday's show, i think you had guests talking about em's. that is an overgeneralized view. ems probably is hiding a lot of dispersion. you do not want a broad-based approach at this point. the discussion is creating opportunity. with an em, there are smaller pockets, whether it is saudi arabia, the middle east, where southeast asia, indonesia, malaysia, where we see a lot of
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opportunities. the broad-based approach in the end is probably not a good one at this point. haidi: health care can be tricky depending which part of your cycle you are investing in. that is one of the area has where you are positive across southeast asia. pooja: we are. within health care, we are not looking at biotech. those stocks are still risky. there's a lot of potential for binary outcomes there. we are looking at medical services. the reason these stocks are benefiting is the southeast asian economies are recovering from covid and people are going back for elective procedures and surgeries that they had postponed. coming back to this story, what we look for? we are looking for positive fundamentals and positive sentiment. we think positive fundamentals come through.
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this is one of the few sectors where investor sentiment is positive as well, meaning we are seeing foreigners also be more positive on this sector. shery: how does the broader earnings outlook across asia compare to how sentiment is being priced in? pooja: that two are very correlated. markets that have seen negative earnings, china be case in point, has also seen massive foreign outflows. markets like indonesia, being revised upward, has he foreigners buy into the market. the two are correlated. is spending overdone in some places and some places the buying is not fully affecting the strength of earnings. haidi: always great to have you with us. be sure to tune into bloomberg
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radio to hear more from news leaders and get in-depth analysis. we are now broadcasting their from our studio in hong kong. you can listen inside the apple or bloombergradio.com. plenty more ahead. this is bloomberg. ♪ and it's easier than ever to■ get your projects done right. inside, outside, big or small, angi helps you find the right so for whatever you need done. with angi, you can connect with and see ratings and reviews.
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shery: we are counting down to the start of trading. some of the stories we are watching, in japan, we will get a check on liquidity with a data set to be released in about 30 minutes. also the earnings from dozens of companies including mitsubishi chemical, and japan's bank. we will be watching softbank after it reported a record and will loss of $20 billion. we saw the selloff in tech shares pummeling the value of its portfolio companies.
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in south korea, the president will hold a meeting with the be ok governor and finance minister to review the financial markets. samsung released fourth-quarter earnings. south korea's import prices in april rose 35% year on year. we will be watching those trade numbers. haidi: we are watching airbnb ahead of this big announcement on wednesday. the company's biggest change in a decade. they are rolling out new features like categories as well as beefing up customer support and satisfaction
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about the company's future and the impact of rising prices. >> the reason that the price per night went up was mostly because people are poking more expensive airbnb's. before the pandemic, people were traveling by themselves, booking one or two bedroom homes. now they are putting they are homes to travel with families and groups and it has been a shift from a judge in north america and europe and these are higher price per night. that is the primary contribution for the increase. you are correct, a lot a people are not going to be able to afford to travel, but airbnb was started during the great recession in 2008 in people use airbnb because it was a more affordable way to travel. after people not being able to their home, they want to get out this is going to be a travel rebound unlike anything we have seen before. >> even though you are predicting for travel rebound, you have airbnb shares down to new lows. i'm curious how you are watching this broader market turmoil. >> i'm not watching the broader market turmoil. i would hope shareholders know that i am obsessed over every day, the inputs to the stock price, not the stock price. my job is to make sure we have
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the best service, we have enough hosts, they are prepared for the travel season. we are going to play a long game and the long-term shareholders will benefit. >> i wonder how this impacts retention and recruiting. we are seeing companies that soared in the pandemic struggling, coinbase, robinhood. do you think this could impact hiring or the mood in silicon valley? >> we are overwhelmed with hiring. two weeks ago, we announced that airbnb employees can they've and work anywhere in you can move whatever you want, we are not going to lower their pay. since we made that announcement, one million people visited our jobs and careers page. we only have 6000 people at the company. there might be broader considerations, but we have a lot of interest and i don't think that will change. >> twitter announced a hiring freeze and cutting costs, resending some offers for a different reason.
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with this on top of other companies pausing hiring, this could be a moment of opportunity for you. do you see this as a chance to attract for nutella? >> a lot of people are reaching out from other companies, many because people are -- companies are asking people to come back to the office were not hiring. airbnb is stepping on the gas. shery: brian chesky speaking to emily chang. next, a deeper dive into the chaos for cryptocurrencies. we will speak with a bloomberg opinion column us about why this is a risk for other asset classes. this is bloomberg. ♪
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>> i would not characterize it
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at this scale as a real threat to financial stability, but they are growing rapidly and they present the same kind of risks that we have known for centuries in connection with bank runs. >> janet yellen on the meltdown of the stablecoin and we saw that reverberated through the market. we are talking about that 94.55 level we have not seen in two years or so. we are seeing more stabilization since that happened. bitcoin still trading around the 28,000 level, below 29,000. either below the $2000 level. we are getting coin market cap saying the wipeout of wealth has been around $200 billion in a 24
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hour time period. the gyrations in the crypto space have been huge. haidi: let's get to our next guest, he says the struggles are a concern for all markets. joining us is aaron brown. he was previously the head of financial market research at a qr financial management. typically you don't really assume that traditional investors and crypto investors are cut from the same cloth or these asset classes are closely correlated, but you are saying basically any institution that relies on a liquidity platform should be worried about this. aaron: i am not suggesting all liquidity protocols are going to fail, but this is a story about liquidity protocols, not about crypto. .
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i ust was never a fundamental part of the crypto economy. the method it used to support its tech and failed is one that is used more extensively in traditional finance. the way ust is supposed to work as if the crypto coin falls in value, it gets purchased and the purchase reduces the supply as he pushed the price tag up to one dollar. there are some beautiful mathematics behind this, it should work, but it is the same system the fed uses when it sells treasuries to push up the value of the dollar to drop inflation. or etf's years maintain and etf price close to the net asset value of the underlying securities. this protocol is not widely used in crypto. in the case of terrausd, it was
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the whole platform was a nice idea going too fast. they put more money into marketing, into growth than building a fundamental infrastructure. i think it failed to do infrastructure problems rather than at attack from the outside or the other things people have been saying. i don't see it affecting crypto markets, i think it is a victim of crypto decline rather than a cause. crypto has been going down for some time. eventually, it got to a point where people started losing faith in the reserves terra had to support its currency and therefore, they had a bank run. this is the way the protocol is supposed to work accept all of the terrausd holders were supposed to get out of a dollar and that did not happen.
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haidi: we heard janet yellen say there needs to be more regulation, that this is a warning. should this gift' effort to try to integrate crypto assets into the traditional financial system? aaron: i don't think so. regulated institutions, you see creative methods. i don't think there's a lot of leverage holdings in crypto investors. traditional investors borrow a lot of money to buy bitcoin. i think virtually a large crypto investors realize these are highly volatile assets. if they go down, it will be like that 2000 technology crash. there will be a lot of market value wiped out but it will not cause a credit crunch. shery: as secretary yellen set, they don't necessarily pose a threat to the financial system now, but at what point could an
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implosion like we are seeing this time around pose a danger? aaron: the necessary step is people have to start borrowing from traditional financial institutions to buy crypto. when that happens, janet yellen not have to worry about crypto assets going down. but they are so volatile right now. people borrow crypto to buy crypto. the internal gyrations. a bank will rarely low that much money to my crypto. shery: how much of this has to do with crypto investors that were wiped out during the meme stock frenzy, and now they are getting hit on the crypto space and are scared about everything else? could we see a broader selloff if this continues? aaron: people love to play -- love to blame retail investors.
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item see this as being a big resell. the sellers in the currency luna , the terrausd problem sprang from luna. those were 10 million orders and up. i don't think this was retail investor sentiment. shery: it was good to have your insights. his views on what is happening with that chaotic crypto space. let's get back to the markets and softbank group which posted a record and to a record annual loss of $20 billion. su keenan joins us now. this is about the sharp drop in tech shares. >> it is also a dramatic reversal for softbank, which one jericho set a record for the highest profit in a quarter for any japanese company. let's drop it in the bloomberg and take a look at that loss you
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can see in that red to the right. this is a company, the vision funds that invest in private companies, startups, but it is the publicly traded company that crushed the value of the portfolio. it has a lot of tech firms that traded at skyhigh valuations during those years of easy money. you are looking at the full-year losses on three of their biggest blockbuster holdings as they were thought to be, coupang, didi, and uber. these are now the biggest tribes. softbank's own stock fell ahead of its earnings, that brings is year-to-date line in the high double digits. a steep price for outsized wagers. this is causing them to dramatically scale back
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investments. they are doling out $2.5 billion in the january to march quarter, down from more than $10 billion a quarter earlier and below the peak of more than $33 billion in 2018. a departure from prior years and a signal that times have changed at softbank. haidi: did we get any update? su: they are bullish on arm and you could see a shift in tone according to those of the press conference. he was defensive in talking about the vision funds in a harsh environment going forward. when it came to arm, he talked about opportunities to play offense. he says arm could be the most valuable asset that softbank has. he says that the chip design company is on a path for initial public offering, there had been
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challenges, a controversy in removing a rogue ceo, that is behind them. he was asked when he thinks the ipo might be, said he talked about the turbulence in the market, did not want to set a date, but said as early as possible. he said softbank would continue to hold its majority stake was the company goes public. the arm ceo told bloomberg that they are seeing a surge in revenue mainly because chip products are expanding too many other business. their business, doing very well. softbank seeming to look to the future for arm, but they see a harsh environment for investment over the next one to two years in general and particularly in china. haidi: coming up next, it has been a year since the atlanta shootings.
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we will be discussing the future of the anti-asian racism movement. this is bloomberg. ♪
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>> this is "daybreak: asia." jay powell has reiterated the central bank is likely to raise
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interest rates by a half percentage point at each of its next two meetings. speaking to marketplace, jay powell said the fed is prepared to do more to control inflation. there were achieving a soft landing would be challenging. tether off its dollar peg, often confidence in cryptocurrencies. the stablecoin felt to a december 2020 low before bouncing back. it chief technology officer assured investors. terrausd has volatility in the crypto market. south korea, japan, and the united states condemned north korea's latest weapons test. south korea says the north launched missiles on thursday. south korea inaugurated its new president this week and president biden visits the region in coming days. with three has reeled what it
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calls the explosive spread of an unknown fever after confirming one death from covid-19 and ordering a nationwide lockdown. scientists have released the first image of the supermassive black call at the center of the milky way galaxy. it is 27,000 light-years from earth and is considered supermassive because it has a mass of more than 4 million times that of earth's sun. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: may marks asian-american and pacific islander heritage month in the u.s. let's discuss the future of the anti-asian racism movement and bring in manjusha kulkarni of the api equity -- aapi equity
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lines. she is also the founder of a coalition of a coalition arrest stopping anti-asian discrimination. we have seen anti-asian racism and violence escalating during the pandemic. i personally am afraid of walking the streets of new york city at this point. how much progress has there been in addressing this violence? manjusha: thank you for having me on. you are right that what we have continued to see since the beginning of the pandemic is increased acts of hate against the asian-american and pacific islander community in the united states. since launching stop aapi hates, we have received 11,000 incident reports from all 50 states and the district of columbia. the trends have maintained can been relatively the same
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throughout, which is that verbal harassment tops the list, we also see individuals have experienced physical assault as well as civil rights violations. that means discrimination in the workplace as well as in retail and housing. what we have seen is that women bear the brunt of the discrimination, especially in terms of verbal harassment and attacks. in terms of the progress, we are beginning to look at solutions and we know that, because this is a systemic problem, it is going to take systemic answers. shery: in what form will those answers come? what policies do we have to look for in government or civil society? manjusha: there are a number of solutions. among the three that we are prioritizing are civil rights
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enforcement and better infrastructure, education equity, and community safety. when we think about these, in the california legislature, we introduced three bills to address street harassment, which we know that women across our country are experiencing and high numbers, not only asian americans and pacific islander women, but others. to address issues around rider safety and public transit. michelle was killed on the new york subway and many other women have been attacked while taking transit. finally, that retail sector, making sure that customers feel safe getting groceries, picking up their prescriptions, and living the activities, their daily life. we believe these are the right solutions. they are making their way to the
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california legislature and we are hopeful that we will see some of that systemic change. haidi: social media has been criticized for giving a platform to a lot of that racism and hate. having seen progress in terms of the policies and efforts being bay to clamp down on that? manjusha: we have begun to see some of that at the federal level, there was a covid-19 hate crime still. i think the fact that we are seeing responses at a local state and governmental levels is important for communities to file are being heard. we know that states like california and have made investments. in california, $156 million for asian-american community's. in new york, $20 million. we need to see the same thing in the business side. we need to see it in
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philanthropy. knowing that our communities have experienced underinvestment for decades, and we think this is going to need a path forward. haidi: what has been the impact when it comes to asian owned businesses? have you seen efforts to give support to the business owners and business community that have been affected by this? manjusha: our community has experienced record levels of small business closures during the pandemic, only second to that of african-american businesses. in high rates of unemployment party as a result of that. it is important that we see investments being made and the state and local levels to ensure our business owners can survive the pandemic and its impact and thrive moving forward because they have so much to offer our
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communities, as restaurant owners and the retail space, etc. more needs to be done in terms of those investments and providing resources to the owners. shery: thank you for joining us and for your efforts to fight anti-asian racism. executive director at the aapi equity alliance. we have breaking news, you're getting shanghai covid case numbers. 2090 six cases, two new deaths. a number we are watching his the four to covid cases outside quarantine. we have seen more days without infections outside of isolation, we could see an easing of those restrictions in shanghai. it is not seem likely at this point with shanghai finding four new cases outside quarantine. in addition to those two infections outside of isolation centers.
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the shanghai lockdowns continue, we continue to see abounds of mass testing. we will be waiting for beijing numbers as well. this is bloomberg. ♪
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haidi: a quick check of
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headlines. twitter has a hiring freeze and other efforts reflecting the company's state of uncertainty while it awaits elon musk's takeover. the company will not hire new employees and may rescind offers already out with some exceptions for goals considered business-critical. an internal review and effort to spin off its asian operations, the bank has opted goldman sachs to address the case. the biggest shareholder pushed for its business to help improve returns. executives are against a spinoff. global semiconductor shortage persisting into 2023. after supply chain issues caused by its parent company, the company proposed a quarterly loss of $130 million. tata motors says inflation
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issues are the biggest concerns. shery: we continue to wash the movement in the crypto space. we are talking about a little bit of a recovery when it comes to bitcoin and ether. bitcoin below the $30,000 level. but this much better than that plunge towards $25,000 we saw earlier. ether headed towards the $2000 level. this after that crash below that crash below the dollar peg for terra. we continue to watch those coins as we are hearing from going market cap that the wider cryptocurrency selloff has wiped $200 billion of wealth from the market in just 24 hours. very difficult to calculate given the big fluctuations we are seeing across crypto assets. this is one reason some of the stocks that we will be watching
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when trading begins in japan and south korea are those crypto companies including str holdings as well as business course after janet yellen chimed in saying the market meltdown of terrausd shows the dangers of tokens that appear to be paid to the u.s. dollar. we are keeping an eye on softbank after it reported the record and while loss of $20 billion. we talked about the selloff in crypto. yields continue to rise. that has hit the value of softbank's portfolio companies. haidi: you broke the news of or community transmission continuing with a handful of cases in shanghai. we are getting news in beijing with 50 local covid cases from may 12 according to local tv.
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this as we saw officials forced to deny rumors of a beijing lockdown with people going out and holding food out of fear, dismissing the rumor of a lockdown even as the city begins new mass testing. another three rounds of cover tests across 12 districts will be done over this weekend and people across the districts asked to reduce movements and to work from home. this comes as we hear from the financial bureau of statistics saying the outbreak and these policies have been a big shock to be economy. all of this will play into the market sentiment as we get into the start of trading across major markets in a few hours. the market opens in tokyo and sydney next. ♪
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shery: welcome to "daybreak asia," from bloomberg world headquarters in new york. david: asian markets have opened for trade -- haidi: asian markets have opened for trade. a late session wall street rebound, treasuries and plan some stability returning to crypto markets. watching soft bank after its adr tumbled on the record vision fund loss. a denial that a lockdown is coming as chinese rush to grocery stores of rumors of intensified covid curbs. shery: japanese equities, coming online, a rebound after the nikkei lost 1.5% in the previous session. continued weakness on the japanese yen after strengthening in the previous session and
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jumping towards the 128 level. quite a surprise on the haven demand, pushing the japanese yen higher. we haven't seen that in a while, given rate differentials with the u.s. and strength of the greenback. we watched jgb yields, the 10-year holding steady at point 245%, given the boj ultra easing policy. we are watching softbank, given that they saw that record loss in vision fund, which amounted to ¥2.6 trillion. although the softbank-owned arm could be a brought spy -- a bright spot and we saw those sales rising at 2021. we are watching korean stocks because we have seen the longest moving streak since august. right now, a rebound come up 7% after eight missions of losses for korean stocks, although the korean yuan holds weak against the u.s. dollar at the 1289 level, a two-year low against the dollar.
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rising energy prices not helping, also pressure of the chinese yuan, which the korean yuan is closely coordinated with, not helping. haidi: we are saying that upside of .1% on the first few minutes of trade, again led by materials, a rebound when it comes to technology and consumer this questionnaire as well, among the leadership. health care trading in sydney. bond markets could give more calm as we see aussie bonds rally amid global growth concerns as we oscillate between investor sentiment when it comes to treasuries on sovereign bonds more broadly. we have bonds trickling back into the overnight session with shorthanded particular seeing attention, but yields dropping both at the three-year as well as the 10-year, the 10-year dropping seven basis point said
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the three-year lowest since may 2. the aussie dollar, we are seeing weakness, up 12% but a weekly loss of almost 3% is insight. lackluster trading when it comes to kiwi assets at the moment. taking a look at treasury, we saw shorter-and treasuries rising from rebel to a sweet spot and they are taking more of a haven after what had been a tremendous selloff, pushing those yields to multi-year highs and we have seen the 10-year see a pullback, 30, still holding steady. s&p 500 index futures, looking for the continuation of causative -- cautious positivity we saw late in the session, brent crude holding at $108, other commodities markets falling due to forced margin calls according to people familiar. shery: our next guest says if
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the dollar continues to get higher, it will be bad for the global economy. joining us is mark matthews, head of research at bank julius baer. where are you positioning, given we are going to see a sharp rally in the equity space? how do those factor in? i -- sinead: i am not -- mark: i am not they do. the is the -- the s&p 500, it is about time that it did bounce. that is an observation. the dollar on a 12-month basis should at least be flat or lower than now because we do think inflation in the u.s. is going to slow down as we move into summer months. the base effect will do a lot of work, but they is signs of demand discussion.
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our assumption for the terminal right of the fed funds rate is about 2.5%, 2.7%, well below where the futures market is pricing in at .5 or above. i think that realization six through that the fed won't have to raise as much as the market expects and then come of the dollar can soften. i don't think it is going to happen tomorrow, but on a 12-month basis, yes. shery: how does the strength of the u.s. dollar affect markets across asia? do capital flows play into where we are headed in terms of asset allocations? mark: in most asian markets, foreigners don't determine the direction of the market anymore. they did 30 years ago. but the local retail investors, domestic investors, they are the price makers now. having said that, for the world
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outside the u.s., when the dollar goes up, things become more expensive or us. the vast majority of things are priced in dollars, so when the dollar goes up, they become more expensive or us, whether we are buying in australian dollars or singaporean dollars or whatever it may be to buy those things. and that is not good. haidi: which end do you prefer in treasuries and bonds? and how is that warned by where you figure how the fed might frontload and equity selloffs from here? mark: i wish i could be precise, but i cannot, so i better not answer that directly. but i would say we feel that the 10-year treasury was capped out, 3.2 or something like that on monday? i can't recall. we think it is capping out here and we have been buying
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treasuries, but i can't give you specifics. i apologize. haidi: emerging markets, perhaps you can give us some view as to where opportunities are across em. is there is since we are throwing out the baby with the bathwater? would you venture into china at the moment? and what about the policy shift when it comes to covid zero? mark: i am happy because i started my career in southeast asia 30 years ago and, for the last 15 years, nobody has wanted to touch it with a 10-foot pole. we are going into a golden era for southeast asia. it is going to be great, number one, because you just couldn't have a conversation about singapore, indonesia, thailand or vietnam for the last 10 years. nobody wanted to listen. everybody wanted to know about chinese technology companies. now, china is essentially off global investors' radar.
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and it is a huge vacuum that needs to be filled, a $10 trillion vacuum needs to be filled and these markets are just a fraction that size. but i notice a a lot of interest in them because of that, because china is not a destination or in money will allocate to. i can't even tell you when it might start to go back. and there are good stories here, these are commodities-rich economies, there are 600 million people in the region. it is opening up, it was delayed by covid but now, it is opening up. i see it myself. lots of foreigners here in singapore now, so i think southeast asia is a bright spot in emerging markets. haidi: the demographics are certainly compelling. mark, great to have you, mark matthews, that if asia research at julia baer. softbank, the vision fund posting a record loss, estate price for big wages on
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money-losing companies. pummeling the value of vision fund companies including the south korean coupon as well as didi in china, the loss $20.5 billion u.s. in the year ending march 31. we saw a profit of 4 trillion yen the previous year. soft bank is up 2.3% after adr dropped overnight after that record loss was being processed by investors. perhaps some of the more optimistic narrative that we got from the call on the arm ipo is making up or the loss. that's get to vonnie quinn with first word headlines. vonnie: argentina's central bank has raised interest rates for the fifth time this year, to keep up with an inflationary spike that has triggered protests. the bcra increased its rate 49
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basis points, the highest level since 1992 per in the central bank says it now expects gradual inflation deceleration. beijing has denied the city will be locked down while urging people not to hoard food amid speculation restrictions will be heightened. instead of a citywide lockdown, the government says it will conduct rounds of mass testing over the weekend. beijing reported 36 new covid cases since thursday, total cases in april to nearly 1000. south korea and the u.s. have condemned north korea's latest weapons test. the north launched three ballistic missiles thursday. south korea inaugurates its new president this week and joe biden visits in coming days. north korea has revealed what it calls the explosive spread of an unknown fever, and is ordering a nationwide lockdown.
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germany accusing russia of using energy exports as a weapon as european gas prices jump on supply concerns. moscow is withholding natural gas supplies and battalion should for european penalties over the war in ukraine for the german economic minister says it amounts to only 3% of the country's gas imports. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ shery: still ahead, regal hotels partners with sandbox for an investment in the digital space. the outlook for hospitality and real estate. first, the meltdown of terra, underscoring the risks associated with crypto. that is next. this is bloomberg.
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♪ >> i would characterize it at this scale is a real threat to financial stability that is growing very rapidly, and they present the same kind of risks that we have known for century in connection with bank runs. shery: the u.s. government's
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most forceful sponsor yet to the meltdown of terra. let's get the latest with our bloomberg cross asset editor. how does terra affect investors via stable going -- stable going -- stablecoin. >> it is making everybody reconsider. the ecosystem relies on a lot of stablecoins to get into and out of the crypto ecosystem. but it is making people think what an algorithm stablecoin really is and making people rethink the larger stability of the crypto ecosystem, so it is really something that has caused a lot of shock waves and made people rethink their investments. haidi: does it change the outlook for brick call -- for
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bitcoin and crypto? joanna: yes. it does make people nervous about what could happen with other crypto's. bitcoin is down at least partially due to the lack of quantitative easing, the fed rate hikes and money sloshing around the system. it is something where bitcoin is down, but it does make people more nervous about getting into crypto generally. david: our cross -- haidi: our cross assets reporter joanna ossinger. let's get more. the terra episode calls into question the risks for liquidity and the protocols more generally. do you see risks that might come
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to broader markets? garfield: part of what is spooking broader markets is, terra and the others are causing contention within the crypto space. and there are signs some of the contagion is coming across into the non-crypto space, directly through tech shares that are tightly linked what is going on with bitcoin and other cryptocurrencies. and more broadly, you have the glosses and you have to sell suddenly. and there are a lot of people having to sell assets suddenly. if you add a few more straws from the crypto complex, that might break, so to speak, the camel's back. shery: let's talk about the dollar. its continued strength has you
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guys asking the question of the day -- does dollar strength mean plaza to point out -- plaza 2.0 . garfield: the dollar being the world's reserve currency is always of interest. if it gets too stronger to weekend does so to quickly, that it disturbs everybody's calculations about where assets should be going. would japan intervene to strengthen the yen after it drops? that would lead to a 22-year low . interventions from emerging markets and talk of whether it needs a plaza accord. it seems far-fetched. but it also seems far-fetched that they would actually go for a plaza accord when the u.s. is looking at 8% inflation and low
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employment. it is probably happy to have some dollar strength, even with economies switching around the way they have. that should help inflationary pressures. and the concern on the plaza accord was that a strong dollar was causing pain on the employment front in the u.s., a lot of jobs were leaving the u.s.. right now, we have got the fed saying that maybe the job market needs to be a little less strong than it is. those conditions aren't necessarily there. but we are in a more multi-polar world back -- then we were back when the plaza accord was pushed through. haidi: are these low bond yields sustainable? have we peaked? our field: -- garfield: a lot of that depends
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on how people see the matrix between rate hikes and inflation, whether investors again become more concerned about inflation or whether, at the moment, we have them more concerned about growth. you would think yields might struggle to go significantly lower their unless there is some actual reduction in inflation expectations. then again, breakevens have shown bond investors are seeing much lower levels of inflation, so that continues to move lower, then yields continue to move lower. shery: remember with the word transitory was controversial? now it seems to be the word peak. any we use the word peak, people are pausing. that was garfield reynolds, our chief asian correspondent, who was asked about the peak in yields and cpi. let's discuss monetary policy because fed chair jay powell endorsed 50 basis point rate hikes again as the fed finally
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-- is the senate confirms him for a second four-year term. kathleen hays joins us and we heard today from mary daly about a 75 basis point move. kathleen: they are basically speaking from the same handbook, monetary policy. jay powell said he does expect 50 basis point rate hikes at the next couple of meetings if the economy performs as expected. i guess we have to know exactly what the fed expects far we know what it means. but if things come in better than expected, we are prepared to do less. worse than expected, we are prepared to do more. he said the fed is not actively considering a 75 basis point rate hike at this point. he does think that achieving a soft landing may depend on factors the fed doesn't control, like supply-chain constraints,
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overseas economies, may be thinking of china when he says that. when we move on to mary daly, the same kind of things, but she said they make sense. it is also interesting that mary daly said financial contentions are tightening nc expect them to keep on tightening, and they should and the economy can balance supply and demand. in other words, bring inflation down and get the labor market less tight, things like that. she does think the rate should rise to neutral. and she said 75 basis point is not a primary consideration. and yes, a bipartisan vote in favor of jay powell, the senate confirmed jay powell on an 80-19 vote. democrats and the white house pointing to the fed'
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inflation-fighting efforts. bowel is widely expected, this doesn't change anything but shows both parties want the fed to fight price increases. haidi: our global economics and policy editor kathleen. let's look at futures in europe opening up after we saw european stocks dropping with the risk off move persisting on growth woes. investors are fleeing risk assets on worries about inflation, tightening monetary policy, we heard bearish remarks from central banks in that region recently. dax futures, .25% higher, msci europe, up .5% and dax futures higher put 25%. we are waiting to see the impacts of natural gas given the surge saw in the previous
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session with some shipments from russia disrupted. get a roundup of stories you need to get your day going into the's edition of "daybreak," and it is available on the mobile in the bloomberg anywhere app where you can customize settings to get news on different industries. this is bloomberg. ♪
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♪ haidi: a quick check of business flash headlines. record annual losses of over $20 billion at the vision fund. the largest tech fund has been grappling with drawdowns. among the biggest losers are didi.
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hsbc has begun an internal review to debunk calls to spin off its asian operations. sources say the bank is facing calls for a breakup after its biggest shareholder pushed for a split of the business for improved returns. shery: the demand picture is weighing on metals, copper falling below 9000 for the first time in months. this is a low we haven't seen in some time. it did settle above 9100, but the demand picture has weighed on prices. we did hear from the eia saying the supply picture is tight. so, we are seeing extensions of gains. gains. gold what's it like having xfinity internet? it's beyond gig-speed fast. so gaming with your niece, has never felt more intense. hey what does this button do? no, don't! we're talking supersonic wi-fi.
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♪ haidi: let's look at markets,
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relatively calm session although a lot of headwinds when it comes to trading for risk assets here in asia. but looking at the good gains across trading in tokyo, the nikkei two to five up 1.5%. softbank dropping after a record loss in the vision fund, that is trading quite nicely in this session, perhaps a relief rally. the kospi up 1.2%, in sydney trading housing back after losses. the likes of health care gaining and even materials names saying have to gains. new zealand is a laggard, .6% off. we did get the manufacturing pmi and the business pmi coming through weaker than expected. probably though, gains just shy of .5% for asian stocks after a
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few days of volatility and selling. vonnie quinn has first word headlines. vonnie: bloomberg learned elon musk once margin call on the tesla shares he was going to use to buy twitter to raise in the financing for the buyout. shares of tesla have fallen when he 5% since he announced he wanted to buy the social media platforms. a veteran lawmaker is returning to the role of sri lankan prime minister for the sixth time. the prime minister and their brother resigned after days of protest and this is seen as an attempt to restore credibility. secretary jay powell reiterated that the fed is likely to raise rates half a percentage point at the next two sessions.
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powell got senate confirmation for his second term as fed chair with an overwhelming bipartisan vote. scientists have released the first image of the supermassive black hole at the center of the milky way galaxy. it is about 7000 light-years from earth and is considered supermassive because it has a mass more than 400 times of the earth's sun. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. ♪ shery: let's turn to china. there is a warning of a wave of default throughout the company -- the country's property industry. what is next for soon act -- su nac?
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yvonne: they still have payments to service. the man known as china's white night has bailed out other billionaires but unable to save his own company now. he dipped into his own pocket for 450 million dollars and also tapped into investors to rise shares -- to raise -- to buy shares to raise 250 million dollars. still not enough to avoid default. a few months ago, sunac was seen as a survivor in the liquidity crisis. now, it is the biggest developer to default on a public bond this year, and morning now that they may not able to meet obligations. the payment in question was the first of the four dollar bond payments that were due in april. they are going to have to wrap up extension exercises again because it is going to be difficult to meet those obligations. sunac, as we heard from the hong kong economic times, are now
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trying to find a more strategic investors to improve their credit status and restore financial capability. but they now join more than a dozen, including evergrande, among property developers who have defaulted on dollar ponds and causing further pain to those investing in chinese developer notes, dropping for a record eighth straight month. haidi: how much risk is there, is there a concern of more default? yvonne coal industry is saying that if sunac can't avoid a default, then no private developer is safe now. it shows how strained developers are given the crackdown by beijing when it comes to financial risk. and when you are that with the slowdown on the housing slump, people are not buying houses in the middle of covid when there are lockdowns or restrictions. so, we have seen contracted sales.
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there was an interesting note after the sunac default, saying the spread of the chain has been remarkable for investors and they think this likely makes up 20%-30% of developers defaulting and now, you are talking about 70% of this market being priced at $.60 on the dollar where the implied default rate is high. bloomberg intelligence, also saying defaults and extensions now make up 70% of chinese high yields, basically showing that it is on investable. -- un-investable, haidi: yvonne man with the latest. beijing officials are trying to calm residents are quashed rumors that a lockdown is imminent in the capital. let's bring in chief nor asia
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correspondent stephen engle hong kong. what did they say to prompt these reassurances? stephen: the rumor mill in beijing is an industry in itself. rumors were swirling around social media beijing yesterday and that prompted and impromptu press conference from beijing officials, had to quash the rumors and say that a lockdown like what is seen in shanghai is not going to happen, we are not going to have so-called quiet periods, essentially a euphemism for you can't leave the house and you can't have deliveries to your house. beijing people, they see what is happening in shanghai, into their seventh straight week of either full or partial locked out, depending on the neighborhood. the most recent numbers for shanghai, the new daily caseload is back above 2000.
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it had dipped as low as 1400. the key issue in shanghai is that four cases were found outside quarantine. that means local community transmission at the requirement for relaxation of lockdowns is to have three consecutive days of zero community transmission. and that is the problem in beijing right now, because they are finding several cases among the very low daily caseload of community transmission, so people were concerned that there was a run on groceries. shery: we have also gotten a rare admission from a chinese official of the huge economic cost caused by covid zero. stephen: that is right, he is the deputy chief of the national euro of statistics. it is extremely rare. even though this was published by the state-run news agency,
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essentially saying the covid outbreak and when you talk about the outbreak, you have to do lockdowns because it is the policy response to the covid outbreak. he says it is causing huge shock of the chinese economy and added it will have only a short-term impact on production and people's lives. how long is a piece of string? how long is a short-term impact is the question. shanghai was promised a short-term impact and we are entering almost two months of the lockdown there. expectations for gdp growth are being ratcheted down by a number of economists, a number of high-profile people like the director general of the world health organization are questioning zero covid as a sustainable policy given the economic and human toll it is having, human rights toll, i should say. there is a death toll everybody's concerned about, but to have the deputy head of the national bureau of statistics acknowledged that there has been a huge shock to the economy is
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just remarkable in its own way. shery: keep north asia correspondent stephen engle with the latest on china. look at the markets, we are seeing u.s. futures gaining ground after we saw that nate rally in -- late rally in the new york trading session. still finished down, but we are talking about a rebound in the final hour of trading, perhaps extending into asia. the nikkei is seeing it yesterday in two weeks and reopening trades are helping the route between japan and south korea, that it may be reopened, south korea discussing that with tokyo. they have been closed since march 2020 due to the pandemic, but we are seeing the kospi also gaining more than 1%. up next, regal hotels tidying up with sandbox for its first investment in the digital space.
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poman lo joins us to discuss hospitality and real estate in the metaverse. this is bloomberg. ♪
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♪ shery: crypto assets, more risk appetite with bitcoin now about $21,000 level. but this is after the plunge we
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saw to 25,000. ether is losing gains -- is seeing gains after the collapse of tara come -- terra, the dollar peg. we continue to watch this space. fluctuations have been huge. look at asia crypto stocks, we have heard from coymarket cap saying losses tied to crypto have been around $200 billion lost in the past 24 hours. but with these huge gyrations, we are keeping a close eye on crypto stocks in japan and south korea. haidi: hong kong-based hotel operator regal group has made his first four way -- first foray into the -- partnering
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with sandbox for nft's. joining us is poman lo of regal hotels. can i ask what the compelling business case is for investing in the metaverse? poman: sustainability an event -- sustainability and innovation are at the heart of our dna and strategic investments. well before the esd trend came prevalent, we launched the first carbon neutral hotel in 2010. metaverse technologies will not only disrupt every facet of our daily lives, but can empower social inclusivity and an environmentally sustainable impact around the world. we launched metagreen to foster a more green community and foster transition to a net zero
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future and we partner with strategic partners who share our vision to save the planet and we are coordinating progressive green movements and behavioral changes in consumers in these communities. haidi: it sounds laudable. can you give me an example of how that would work? how do you create sustainability? how do you d carboni -- d ecarbonize in a virtual world? poman: the idea is to encourage behavioral changes in the real world and metaverse.
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utopian metropolis featuring the first green hotel where you will experience novel online to off-line experiences that you have never seen before. with this partnership, we are leveraging our competencies to lead the way and showcase our vision of what a carbon net zero hotel will look like in 2050. shery: so you are talking about behavioral change and more informing the public rather than actual changes in the way you operate when it comes to sustainability? poman: exactly. it is a very innovative, pioneering decarbonized model. that is why we are building this ecosystem. we can't do it on our own. we have to inspire changes. shery: how big is the land? how much do you pay in terms of tokens are dollars for this partnership? poman: we can't disclose the size at this point, but it is a massive piece of land in megacity, but it is just the beginning. it is scheduled for completion
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in the fourth quarter of the year and is the first green metropolis with six interactive districts. there will be the regal hotels green hotel where we showcase sustainable operations. there will also be the first metagreen convention center for esd related conferences to showcase immersive events. there will be a sustainable-themed mall. haidi: are you -- shery: are you seeing interest from users? how are you going to attract them? poman: we aren't lunging until the fourth quarter. but in terms of interest from strategic partners, we have received overwhelming support. and this is very encouraging because it means we all share the vision to promote a more
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sustainable future. and we are joining hands to drive that transition to net zero. haidi: part of the plan is to sell housing and hotel units across 100 nft. how does this address the goal of financial inclusion? or does it just fade into another asset class that is speculative? and are you worried when you look at the crypto crash? poman: metagreen is meant to be a green ecosystem that will positively harness blockchain, nft sent tokenization to power social impact. we will initially selloff 100 nft's to promote financial inclusion in the most expensive real estate market, hong kong. in hong kong, owning real estate is almost an impossible dream. to own virtual real estate, you
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can buy sandbox, which is going for 10,000. we want to introduce residential units for sale so someone can own a mega estate for the fraction of the cost. we are bullish on the long-term of metaverse developments. this is a great way to make a long-term investment with an amazing upside. there are other things we will offer such as nft art, digital jewelry and fashion. we will be featuring innovative crossover collaborations between our retail partners for concerts , hotel room decorations, customized travel experiences, you name it. in terms of the crunch, we are not about creating trading, we are offering value -- shery: poman lo it was
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interesting to have you on, vice president of regal hotels group. it is billed as airbnb's biggest change in a decade, rolling out new features like categories of castles. airbnb ceo brian chesky spoke about the future and rising prices. >> first of all, the reason price per night went up is because people are more -- are booking more expensive airbnb's. before the pandemic, people were booking one or two bedroom homes. now, they are booking bigger homes to travel with families and groups. and there has been a shift from asia to north america and europe and these are higher priced. that is the primary contribution for the increase in prices. you are correct though, a lot of people are not going to be able to travel or afford to travel. but airbnb was started during the great recession of 2008. people used airbnb because it
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was a more affordable way to travel. after two years of people not being able to leave their homes, many people come i think they want to get out of this will be a travel rebound unlike anything. >> you are projecting a travel rebound, but airbnb shares are down to new lows. >> i am not watching broader market turmoil. what i am obsessed over are the inputs to the stock price, not the stock price. that is the best for shareholders. haidi: air enb -- airbnb ceo brian chesky speaking to "bloomberg technology's" emily chang. coming up, a must-watch market. this is bloomberg. ♪
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♪ shery: hong kong quickly becoming a must-watch market. the financial hub is the center of big worries for traders -- fed tightening in the chinese economy. let's bring sofia horta e costa. we saw intervention in the hong kong dollar, what else are you watching?
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sofia: on the strengthening of the u.s. dollar, what happens to the hong kong dollar is a natural functioning of global moves. what we are trying to deal with here is answer the question, is this peg to be under pressure? are people going to start betting against the economy, against the city as a global financial hub? global financial pressures increase and what we are looking at, liquidity is still high, we still have all these buffers built up since the financial crisis to deal with exactly these kinds of situations. and even though they are falling, we are starting to see foreign see reserves dropping, liquidity dropping, elements of stress are still quite low. but once it starts to move, there is always a lag in hong kong and depending on where interest rates are, look at the
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proxy market. so far, things are calm, but things are starting to become a little more nervous and hong kong markets. haidi: speaking of elements of stress, all these chinese economic indicators are going to come in weak. we heard from the statistics bureau that there is enormous stock because of covid zero. this this mean more expectations of monetary policy or physical easing? and could happy? impetus for recovery in the market? sofia: we could get the answers as early as monday, the monthly data dump when we get an indication of how bad things were in april. but we also get the central bank monthly liquidity operation. there is a divide over whether interest rates will be cut on
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monday. interest rates have not been cut since january, there is caution because borrowing rates are still low. easy liquidity has not gone through to the economy. if we get a move there and also a sign of optimism in mainland markets, that could eat into hong kong. hong kong tends to benefit from liquidity, so if we get more liquidity for module markets, that could come here. we are not seeing a strong pullback yet, but we are seeing some inflows to cup this week. haidi: our chief china markets correspondent sofia horta e costa. in asia, our markets coverage continues as we look toward the start of trading in hong kong, shanghai and shenzhen.
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